The ultimate guide to avoiding financial scams

Pensioners have lost more than £43 million to financial scams since the Pension Freedoms regulations were introduced in 2015, the Department for Work and Pensions (DWP) estimates.
Though experts believe this is an under-reported figure and the actual amount lost to fraud could be up to £1 billion over the past three years.

The changes mean that people can manage their pensions however suits them. But this brings an increase in opportunistic scammers looking to deprive those savers of their hard-earned money.

The best weapons against scammers are education and vigilance. To help, this guide covers all the ways you can protect yourself from scammers and keep your precious savings where they belong.

Types of scam

Understanding how scammers may target you goes a long way in protecting your assets and identifying the warning signs so that you can avoid a potentially dangerous situation as soon as it is presented. The most common schemes are:

Advanced fee:
If you get an email or message asking for financial help to resolve a situation, it is probably fake. This could be a stranger asking for help in releasing a large fund, promising that a high amount of it will be sent to you as a reward. However, there is a much more dangerous version of this scheme which preys on emotions. It involves using a friend or family member’s information to claim that they have been in an accident, or are facing an emergency and need you to transfer money to an account to help them.
Phishing/vishing:
These are emails and phone calls which claim to be from a reputable company. By taking advantage of the existing trust you have in the brand, they can take your details and sell them on, or use them to impersonate you and access your money. Always check the legitimacy of emails with a phone call to the organisation claiming to make the request and do not open any attachments that you have not arranged to receive.
Identity Theft:
Whether they take your details directly or purchase them from a third party, identity thieves can do a lot of damage in a short amount of time. The best defence here is vigilance and reporting unusual activity using the links at the end of this guide. By impersonating you, criminals can open new lines of credit, access existing funds and even target your friends and family.
Exotic investments:
A phone call or email offering high value, short-term rewards can be very enticing. Of course, if it sounds too good to be true, it probably is. Investing can be profitable, but it is always best to do so through professional and legitimate channels, rather than sending money to a stranger, with no reputation, who is likely to simply keep your cash and disappear.
Imitation websites:
Some scammers go to great lengths to recreate every aspect of a company website to trick customers into giving them their personal information. It can be easy to think that we know regularly-visited websites well enough to spot changes, but the truth is, we are prone to skim-reading and overlooking smaller details. Therefore, it is essential to check the source of links, pay attention to browser warnings and remain cautious if anything seems to have changed since your last visit to the site.

These scams are cleverly designed to go unnoticed, but with a little bit of forward thinking, you can protect your identity, money and loved ones from dangerous encounters.

What to look for

There are several tell-tale signs which give scams away:

1. Urgency
Scammers are often in a rush. They add urgency to the situation to make their targets flustered and confused, leaving no time for logical thought or to notice the details which might make you stop and think.

2. Unsolicited contact
If you don’t remember giving you details to a company or feel that the communication method does not suit them, take a step back to analyse the situation. Verify the contact using another method.

3. Requests for money
Any contact asking you to transfer money, or accept money from an unknown source is a cause for concern. Do not give any banking details away to people and companies you do not know well and do not accept payments from unverified sources.

4. Strange contact details
Emails claiming to be from well-known brands are easily identified as scams by looking at the sender’s address. Sometimes, they are obviously not connected to the organisation. Whilst it can be hard to tell, one of the simplest ways to check is to copy and paste the contact information into a search engine and see if it leads to a verified source. This can also lead to review websites where other potential victims leave comments and warnings.

5. Poor grammar
Not everyone is a bestselling author, but reputable companies usually have a professional writer and proof-reader on-staff to make sure that marketing and customer communications are wellwritten.

Scammers often rush their methods and may not speak English as a first language. The occasional typo or misspelling can be forgivable, but continuous spelling and grammatical errors are a major red flag.

Investigating a scam

1. Online search
Simply using a search engine to find information about a message you have received can tell you whether it is legitimate or not. Forums and social media are a great source of company reviews and people will not be shy about warning others that they have spotted a scam.

2. Check the registers
There are many official registers which reputable companies will be on. If you are contacted by a company in a regulated sector, you can search for them on the relevant register to see their listing, or lack thereof. A list of registers is included in the resources at the bottom of the guide.

3. Look for the signs
No matter how small, if any part of a phone call, letter or email makes you suspicious, you have every right to stop communicating and take steps to protect yourself, or seek professional advice. It is always better to check than to be the victim of a costly crime, and legitimate companies will be happy to accommodate and verify their business.

4. Ask friends and colleagues
Sometimes, scammers are given the contact details for everyone in a company and will target them all. If you receive an email or phone call at work, ask around to see if anyone has experienced anything similar. They may know that a new client is due to contact you, or they may have received something suspicious too.

5. Check the news
Large-scale scams are often reported in the media and new methods of committing fraud can be big news. Keep yourself informed about the latest attempts to prevent the victimisation of both yourself and your family, friends and colleagues.

Ten tips to avoid a scam

Don’t click on hyperlinks in emails – go to the website it claims to lead to, directly.
Don’t give out your personal information, such as passwords and bank details.
Learn how to create strong passwords and don’t use the same one more than once.
Only give information to websites you trust and companies that you know well.
Take steps to verify the identity of a company before buying anything.
Use antivirus software and scan emails and websites for malicious activity.
Stay up to date with the latest scams via the news and official media.
Report unusual activity to the relevant authorities. Some companies have options to report criminals imitating their brand.
Contact a company in person or on a trusted phone number or email address if you notice anything suspicious.
Ask questions and make your safety a priority.

Above all, remember the golden rule: if it sounds too good to be true, it will be. There is always a catch and high return, low risk investments simply do not exist.